Immigrant Entrepreneurs and Small Business Owners and their Access to Financial Capital


Full Report

Research Summary

May 2012                    No. 396

Immigrant Entrepreneurs and Small Business Owners,
and their Access to Financial Capital

Robert W. Fairlie, Ph.D., Santa Cruz, CA. 50 pages.
Under contract SBAHQ-10-R-0009.


This study, using data from the 2007 U.S. Survey of
Business Owners, attempts to complete the picture
on immigrant entrepreneurship and addresses questions
such as the following: What hurdles do they
face accessing capital? How do they use capital?
The importance of immigrant entrepreneurs to the
U.S. economy has been very well documented in

Advocacy-sponsored research and elsewhere in the
economic literature. They contribute greatly to the
economy, have high business formation rates, and
create successful businesses that hire employees and
export goods and services. Lacking, however, was
a thorough look at the financial picture that would
complement what we know of them.

Overall Findings

• Immigrants are found to have higher business
ownership and formation rates than non-immigrants.
Roughly one out of ten immigrant workers
owns a business and 620 of 100,000 immigrants
(0.62 percent) start a business each month.
• Immigrant-owned businesses start with higher
levels of startup capital than non-immigrant-
owned businesses. Nearly 20 percent of immigrant-
owned businesses started with $50,000 or
more in startup capital, compared with 15.9 percent
of non-immigrant-owned businesses.
• Roughly two-thirds of immigrant-owned businesses
report that the most common source of
startup capital is personal or family savings. Other
commonly reported sources of startup capital by
immigrant businesses are credit cards, bank loans,
personal or family assets, and home equity loans.
Overall, the sources of startup capital used by
immigrant businesses do not differ substantially
from those used by non-immigrant firms.


• Businesses owned by immigrants have an average
sales level of $435,000, roughly 70 percent of the
average sales level of non-immigrant firms.
• Immigrant-owned businesses are slightly more
likely to hire employees than are non-immigrant-
owned firms; however, they tend to hire fewer
employees on average.
• Immigrant-owned businesses are more likely to
export their goods and services. Among immi-
grant businesses, 7.1 percent export compared
with only 4.4 percent for non-immigrant busi-
• Entrepreneurship increases with maturity, and
married people are more likely to start a business.
• More generally, there is a U-shaped relation-
ship between entrepreneurship and education.
Entrepreneurship rates are lower for high school
graduates than for high school dropouts, but
entrepreneurship rates are similar between those
with some college and high school graduates.
College graduates have higher rates of entrepre-
neurship, and those with graduate degrees have
the highest rates of entrepreneurship.
• Among immigrants, 52.1 percent owned a home
compared with 70.8 percent of non-immigrants.

Scope and Methodology

The 2007 Survey of Business
Owners (SBO) and the 1996-2010 Current Population
Survey (CPS) are the two sources of data that enabled
this study. The analysis of immigrant business finances
would not have been possible without the data from the
2007 SBO. Logit regressions are used to determine the
probability of entrepreneurship.

This report was peer-reviewed consistent with
Advocacy’s data quality guidelines. More information
on this process can be obtained by contacting
the director of economic research by email at or by phone at (202) 205-6533.

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This report was developed under a contract with the U.S. Small Business Administration, Office of Advocacy, and contains information and analysis that were reviewed and edited by officials of the Office of Advocacy. However, the final conclusions of the report do not necessarily reflect the views of the Office of Advocacy.